1999 (9) TMI 105 - HC - Customs

Summary

Issues involved:
1. Entitlement of the petitioner to the reward.
2. Extent of the reward amount.
3. Applicability of guidelines and amendments regarding reward payments.
4. Realization of duties, fines, and penalties.
5. Adjudication and disposal of confiscated goods.

Detailed Analysis:

1. Entitlement of the petitioner to the reward:
The petitioner, an informer, provided details leading to the discovery that M/s. Sanjeevani Fodder Products Pvt. Ltd. and M/s. Fometa India Machines Pvt. Ltd. had evaded Customs duty by violating conditions of an exemption order. The learned single Judge determined that the petitioner was entitled to a reward of 20% based on the principle of legitimate expectation, as the information provided was accurate and led to the seizure and adjudication of the units. The guidelines in place at the time supported this entitlement.

2. Extent of the reward amount:
The petitioner claimed eligibility for a reward up to 20% of the duty evaded, fines, and penalties, totaling Rs. 1.71 crores, but had only received Rs. 10 lakhs. The learned single Judge directed an additional payment of Rs. 25 lakhs. However, the appellate court found this amount high and instead directed an interim payment of Rs. 10 lakhs, with further steps to be taken by the Department to finalize the reward amount based on the guidelines and the realization of duties and fines.

3. Applicability of guidelines and amendments regarding reward payments:
The guidelines from 1985 allowed informers to receive up to 20% of the duty evaded, fines, and penalties. However, an amendment in 1989 stated that final rewards should only be paid after the actual realization of duties and fines. The court noted that the new guidelines were not retrospective and upheld the petitioner's right to a reward based on the guidelines effective at the time of the information provided.

4. Realization of duties, fines, and penalties:
The Department argued that the petitioner could not receive the full reward until duties and fines were realized. Despite some units being sold and fines deposited, the full amount had not been collected. The court emphasized that the delay in realization was due to the Department's inaction and directed them to expedite the adjudication and auction of goods.

5. Adjudication and disposal of confiscated goods:
The court observed that the Department had not taken sufficient steps to dispose of the confiscated goods despite the absence of stay orders on pending appeals. The court directed the Department to complete the adjudication and disposal process within six months and make interim payments to the petitioner.

Conclusion:
The court modified the single Judge's order, directing the Department to pay Rs. 10 lakhs to the petitioner in two installments within six weeks and to complete the adjudication and disposal of goods within six months. The petitioner's entitlement to further rewards would depend on the realization of duties and fines, with the Department retaining the option to negotiate the final reward amount. The writ appeal was disposed of accordingly, with no order as to costs.